A major scheme to help low-income families and key workers into home ownership has been boosted with the announcement of a new private sector partner.

And the partner to the government scheme will also be offering its own mortgage products aimed at strapped first-time buyers grappling with the slippery first rungs of the housing ladder.

Advantage, a Morgan Stanley group company, will join Halifax Bank of Scotland, Nationwide and Yorkshire Building Societies, as a private sector partner in the government’s new Open Market HomeBuy scheme, which will increase the purchasing power of eligible households by around 25%.

From October, households qualifying for the scheme will be able to apply for a regular mortgage topped up with an equity loan. This will allow thousands more families to get a first step onto the property ladder.

Currently, a family on a combined income of £35,000 could typically obtain a mortgage of just £122,500 independently. If eligible for Open Market HomeBuy, they could potentially buy a home valued at between £150,000 and £180,000.

No deposit is required to participate in Open Market Homebuy, and monthly repayments would start at around 20% less than buying without assistance, as lenders and government would expect to benefit from any increase in the value of their equity share in the property.

Lenders will be providing at least half the funding for the equity loans under the scheme with government making up the rest. This innovative approach will enable more than double the number of households to be helped into homeownership with the same amount of public money.

The new Open Market HomeBuy product will be available to local authority and housing association tenants and key public sector workers including nurses, teachers, social workers and police officers. The scheme will be managed by HomeBuy agents, who provide a 'one stop shop' for affordable housing options in their local areas.

In a separate announcement, Morgan Stanley said it will also launch a range of mortgage products called Flexishare under the Advantage company name that will enable prospective homeowners to borrow more than currently allowed through traditional UK mortgages in return for the bank's taking a share of the potential capital appreciation or depreciation of the underlying property.

Morgan Stanley intends to expand from its role as securitiser and underwriter of residential loan portfolios to become an actual mortgage lender.

"If you're a securitiser of residential mortgage loans, you are one or two steps removed from the underlying lending," said Brent Williams, an executive director at Morgan Stanley. "The mortgage platform that we are building puts us in the flow from start to finish."

Morgan Stanley described Flexishare as a single-charge mortgage consisting of a conventional mortgage of up to 80% of the property's value and an additional loan for between 15 and 35%, which determined Advantage's exposure to changes in the underlying property's price.